Report: Mobile finance is great, but don’t overlook the role of banks

This week the Institute of International Finance (IIF) and Center for Financial Inclusion (CFI) released a joint study on “banks’ significant contributions to expanding financial inclusion.” Based on in-depth interviews with leaders from 24 national, regional, and global banks, the report details the opportunities and challenges they face in reaching the underserved market. In the process, it provides a needed counterbalance to the (justifiable) hype around mobile finance, pointing out that 90 percent of the 720 million-plus adults who accessed formal financial services for the first time between 2011 and 2014 opened their accounts at formal institutions. (Meanwhile, only 54 million of them used mobile money as their primary account.) However, as CFI Managing Director Elisabeth Rhyne highlights in her summary of the report, “digital payments are the leading edge of new customer outreach,” and “banks are evolving alongside, often with and sometimes beyond, financial technology start-ups and telecos.”

Making a Splash in Sanitation

Sponsoring a country-wide innovation challenge is a fairly arduous way for a grant-maker to determine which organizations to fund. But, as Water.org showed this week, it can be especially meaningful and effective. The Water and Sanitation Challenge, launched in February by OpenIDEO and sponsored by Water.org, focused on market-based, scalable solutions in India. More than 140 proposals were vetted, then the list was refined to 39, then to 10, and finally to two. Feedback and collaboration were built into every stage of the process. Congratulations to the winners, Samagra and Svadha, which will each receive $250,000, and to OpenIDEO and Water.org for going beyond the obvious to find practical solutions to pervasive problems.

d.Light: Growing Faster than the Speed of …

Less than four years ago, we brought you this short missive celebrating d.light as it marked its 10 millionth customer for its solar lamp, the S1 model lantern, which at the time was sold for as little as $8. The article begins with d.light’s marketing director in India throwing one of the company’s lamps to the ground to demonstrate its durability. Today, the social enterprise has more than 51 million customers in more than 60 countries, according to a piece published in Entrepreneur this week. At its current trajectory, d.light will reach its goal of 100 million customers by the start of the next decade. One of them may just be President Barack Obama. As the article points out, d.light founder Sam Goldman presented the president with one of the lamps at last year’s Global Entrepreneurship Summit in Kenya, explaining that Obama could throw it off the roof of the White House and it would still shine on. “Oh, I’m not going to do that,” quipped the president.

Chan/Zuckerberg have officially entered the impact investing arena

Colorful Language

Can emojis improve global health? The folks at McCann Health, India, Narayana Health and WeChat think so. The three organizations have partnered to create special characters for a mobile messaging system that lets people in India communicate their ailments without complicated or embarrassing discussions. Dr. Harshit Jain, a senior vice president at McCann, calls the cartoonish characters a “unique new language for health.” Who are we to argue; if the emojis make it easier for the 40 million Indians on WeChat to take a more active role in their health, that’s a language we should all learn.

There Won’t Be a LatAmExit

“It is better to weep over a loss than to have never had anything to lament.” That’s Patricio Navia’s take on Brexit for the Buenos Aires Herald. At least Europe has an integration initiative worth fretting over, Navia says; Latin America, to its detriment, has never been able to establish consistent regional coordination. There have been many attempts, Navia points out, covering areas as diverse as telecommunications and health, but the resulting organizations’ influence and power always seem to diminish. Navia got us thinking. How many Latin Americans share his Euro-envy? Could the publicity of Brexit actually spur a lasting Latin American integration initiative? What implications might that have for global development and health? As we learned from Colombia’s peace treaty and the inclusive business efforts that are a component of the reconciliation process, there can be strength in unity.

Quotable

“When we talk about (economic) polarization, it has significantly come down with the practice of capitalism in many emerging markets. However, the fact that only 80 billionaires hold more than 50 percent of the global wealth also raises some critical questions about how capitalism is being practised. This also indicates that we have allowed the system to get skewed towards few individuals and I think we need to create a strong narrative, which is different, and the philosophy of conscious capitalism can set things right.” – Raj Sisodia, co-founder and co-chairman of Conscious Capitalism Inc. during a panel discussion at the Social Enterprise Summit 2016 in Mumbai.

Will emerging countries lead the blockchain revolution in finance?

In our last Roundup, we flagged a rather vague press release announcing the “world’s first usage of blockchain technology in microfinance.” The picture has gotten somewhat clearer since then. The Bitcoin-focused website CoinTelegraph interviewed Takao Asayama, CEO of Tech Bureau Corp, whose blockchain platform was used by BC Finance, a microfinance bank in Myanmar, to successfully record the entire transaction history of one of its 19 branches. According to Asayama, the bank typically uses Excel spreadsheets to manage this data. With blockchain, he says, “They can build a ledger system that can handle all transactions with digital signatures,” allowing the bank to “easily compress their budgets down to, say, 1/10 or 1/100” and potentially eliminate the user fees required to manage the very small transactions of microfinance. He speculates that looser regulations will push developing countries like Myanmar to the forefront of efforts to incorporate blockchain into financial services. Jeremy Kloiser-Jones, CEO of BC Finance, seems to agree: he told CoinTelegraph that he envisions blockchain “supporting a new type of core banking system,” and that his bank will announce a new blockchain-based service in the coming weeks.